Kan says weaker yen helps business, refers to intervention+

TOKYO, Jan. 8 Kyodo -
Finance Minister Naoto Kan reiterated Friday that a weaker yen is preferable
for the Japanese economy and hinted that Japan is ready to intervene in the
market if necessary.
Speaking at a news conference, Kan, who became Japan's top finance chief
Thursday, said he has the right to take ''some sort of action'' on foreign
exchange rates and that his latest remarks on currency issues have not had any
negative impact on the Japanese business community.
Kan's remarks Friday came just after Prime Minister Yukio Hatoyama, as well as
Chief Cabinet Secretary Hirofumi Hirano, said that government officials should
not make comments on foreign exchange rates.
''Stability in foreign exchange (rates) is desirable and a sharp fluctuation is
not desirable,'' Hatoyama told reporters in front of his official residence in
the morning. ''With regard to foreign exchange, I think the government should
basically not refer to it.''
Kan also said currency levels should be decided ''in principle'' by market
players.
He said he should have mentioned that basic principle Thursday in his first
news conference after becoming finance minister.
Still, he said, ''But at the same time...the business community is planning
business by assuming a certain foreign exchange level and if it changes a lot
from the assumption, that could have a range of effects on the economy.''
''What the prime minister said is basically right, but given that I'm directly
in charge (of currency issues) I must take into account the business
community's expectations,'' said Kan, who is also deputy prime minister and
minister in charge of economic and fiscal policy.
''I must be conscious that with the new post I have been given the capacity and
ability to take some sort of action on foreign exchange,'' Kan said.
Asked about the possibility of stepping into the market, he said, ''I'm not
talking about the situation now...what I'm just saying is that I have been
given that capacity and ability.''
Kan said he knows that he needs to be careful with his remarks regarding
capital markets and mindful of economists' opinions.
But he said that if he heeds too much, he would not be able to form his own
stance.
On Thursday, Kan said in his inaugural news conference as finance minister that
many Japanese companies think it would be ideal for the U.S. dollar to be
around 95 yen for trade, which contributed to the dollar's surge to a
four-month high in the mid-93 yen range.
He also said at that time, ''I will make efforts, including working together
with the Bank of Japan, to get the yen to appropriate levels while considering
various effects on the economy that may be caused by currencies.''
Japan's currency policy is controlled by the Finance Ministry with the central
bank acting as its agent. Japan has not stepped into the currency market since
March 2004.
Unlike Kan, his 77-year-old predecessor, Hirohisa Fujii who resigned for health
reasons, repeatedly warned that countries should refrain from competing in
currency devaluation, despite the global economic downturn.
Fujii's remarks on foreign exchange were often taken by the market as signaling
Japan's reluctance to intervene, contributing to a sharp rise in the yen versus
major currencies last year.
Although it is rare for a Cabinet member to make comments on currency rates,
Financial Services Minister Shizuka Kamei supported Kan's latest remarks
showing his preference for a weaker yen.
''A situation where the yen rises further and further does not create a
positive environment for the Japanese economy,'' Kamei said at a separate news
conference.
''The yen's rise proceeded at a relatively fast pace at one point lately, and I
think it's only natural that minister Kan expressed concern about such a
situation. I think so, too,'' Kamei said.
==Kyodo